5 arrested for illegal electronic cigarette trade

Li Qian
Five were arrested for illegally trafficking electronic cigarettes worth hundreds of thousands of yuan.
Li Qian

Five have been arrested after they were caught trafficking electronic cigarettes, whose trade is under strict control in China, according to prosecutors of Minhang District.

According to Customs rules on electronic cigarettes, an inbound passenger is allowed to bring back 5,000 yuan (US$779) worth of products. The State Tobacco Monopoly Administration strictly controls the trade of cigarettes, including electronic cigarettes, and traders are required to obtain approval and a license.

The group's alleged ringleader, identified as Zhang Ming, knew it was illegal but still took the risk as it was a lucrative business, prosecutors argued.

He recruited two helpers. Xiao Peng, a frequent traveler, was told to meet overseas seller and make orders. The other, Liu Fa, ran a logistics company doing business including cross-border transportation and Customs clearance. He was responsible for smuggling the products back into China, prosecutors alleged.

Each of the three invested 200,000 yuan before Xiao Peng flew overseas in December last year. He spent a total of 600,000 yuan buying 2,500 boxes of "stick," a major component of electronic cigarettes which is heated inside a battery-powered device to produce nicotine-infused vapor for users to inhale.

Xiao Peng told the seller to send the "sticks" to his friend’s company based in Japan, which produces food crisper containers. Later, Liu told his friends in Japan to help repackage the products, mixing them in with boxes of food crisper containers and sending them to China.

When the products arrived in Shanghai, Liu managed to retrieve the products from Customs officials by declaring they were just food crisper containers. After passing checks he transported the products back to his warehouse, prosecutors said.

In the meantime, Zhang found a buyer called Hou Lin, an illegal cigarette trader. Zhang charged Hou 280 yuan, 40 yuan higher than cost price, for each box.

In March this year, Hou and Zhang were busted by police in the middle of the trade after a tip-off. Police seized 2,500 boxes of "sticks."

Later, police confiscated a further 560 sticks from Hou’s warehouse as well as the vehicle of his subordinate, Xiao Yong.

The five men were arrested for illegal operation and further investigation is under way. 

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